Toronto Stock Exchange: BPF.UN
HIGHLIGHTS
- Franchise Sales1 of $222.0
million for the Period, representing a decrease of 1.0%
versus the same period one year ago.
- Same Restaurant Sales2 of negative 1.0% for the
Period.
- Cash flows generated from operating activities of $9.1 million for the Period, representing a
decrease of 1.3% versus the same period one year ago.
- Distributable Cash3 increased 1.8% for the Period
and Distributable Cash per Unit4 increased 3.0% for the
Period.
- Payout Ratio5 of 96.8% for the Period and 89.9% on a
trailing 12-month basis. Cash balance at the end of the Period was
$4.7 million.
- On February 13, 2024, the Fund
increased its monthly distribution rate to $0.113 per unit of the Fund ("Unit") for
the January 2024 distribution from
the previous monthly rate of $0.107
per Unit, being an increase of $0.006
per Unit or 5.6%.
- On May 9, 2024, the trustees of
the Fund declared a distribution for the period of April 1, 2024 to April 30,
2024 of $0.113 per Unit, which
will be payable on May 31, 2024 to
unitholders of the Fund ("Unitholders") of record on
May 21, 2024.
VANCOUVER, BC, May 10, 2024
/CNW/ - Boston Pizza Royalties Income Fund (the "Fund") and
Boston Pizza International Inc. ("BPI") reported financial
results today for the first quarter period from January 1, 2024 to March 31, 2024 (the
"Period"). A copy of this press release, the unaudited
condensed consolidated interim financial statements and related
management's discussion and analysis ("MD&A") of the
Fund and BPI are available at www.sedarplus.ca and
www.bpincomefund.com. The Fund will host a conference call to
discuss the results on May 10, 2024
at 8:30 am Pacific Time (11:30 am Eastern
Time). The call can be accessed by dialling 1-844-763-8274 or
+1-647-484-8814. A replay will be available until
June 10, 2024 by dialling
1-855-669-9658 or +1-604-674-8052 and entering the access code:
0804 followed by the # sign. The replay will also be
available at www.bpincomefund.com. Capitalized terms used in
this press release that are not otherwise defined have the meanings
ascribed to them in the Fund's MD&A for the Period.
"The first quarter of 2024 presented macroeconomic challenges
for the full-service restaurant industry", stated Jordan Holm, BPI's President. "The
prevailing economic conditions, characterized by high interest
rates and inflationary pressures have influenced consumer behavior,
impacting discretionary spending and leading to a cautious approach
towards dining out. Despite these obstacles, we had solid
Franchise Sales in the first quarter underscoring the resilience of
our business. We remain pleased with the dedication
demonstrated by our franchisees and their restaurant teams."
PERIOD RESULTS
SRS, a key driver of distribution growth for Unitholders,
was negative 1.0% for the Period compared to positive 25.7%
reported in the first quarter of 2023. SRS for the Period was
principally due to macroeconomic challenges faced by the
full-service industry, partially offset by menu price
increases. The COVID-19 restrictions that existed during the
first quarter of 2022 were a significant factor in the positive SRS
reported in the first quarter of 2023.
Franchise Sales of Boston Pizza restaurants in the Royalty Pool
were $222.0 million for the Period
compared to $224.2 million for
the same period one year ago. The $2.2 million decrease in Franchise Sales for
the Period was primarily due to negative SRS.
The Fund's net and comprehensive income was $8.5 million for the Period compared to
$6.7 million for the first quarter of
2023. The $1.8 million
increase in the Fund's net and comprehensive income for the Period
compared to the first quarter of 2023 was primarily due to a
$2.4 million increase in fair
value gain, partially offset by a $0.4
million increase in deferred income tax expense, a
$0.1 million decrease in
Royalty6 and Distribution Income7 and a
$0.1 million increase in interest
expense on Class B Unit liability.
The Fund's cash flows generated from operating activities was
$9.1 million for the Period compared
to $9.2 million in the first
quarter of 2023. The decrease of $0.1 million was primarily due to an
increase in income taxes paid of $0.2
million and a decrease in Royalty and Distribution Income of
$0.1 million, partially offset by an
increase in working capital of $0.2 million.
The Fund generated Distributable Cash of $7.3 million for the Period compared to
$7.2 million for the first
quarter of 2023. The increase in Distributable Cash of
$0.1 million or 1.8% was
primarily due to SIFT Tax on Units adjustment of $0.2 million and lower interest paid on debt of
$0.1 million, partially offset by
decreased cash flows generated from operating activities of
$0.1 million.
The Fund generated Distributable Cash per Unit of $0.344 for the Period compared to $0.334 for the same period one year ago.
The increase in Distributable Cash per Unit of $0.010 or 3.0% was primarily attributable to the
increase in Distributable Cash outlined above and fewer Units
outstanding compared to the same period in 2023 due to the Fund's
normal course issuer bid.
The Fund's Payout Ratio for the Period was 96.8% compared to
91.6% in the first quarter of 2023. The increase in the
Fund's Payout Ratio for the Period was due to distributions paid
increasing by $0.5 million or
7.6%, partially offset by Distributable Cash increasing by
$0.1 million or 1.8%. Payout
Ratio is calculated by dividing the amount of distributions paid
during the applicable period by the Distributable Cash for that
period. The Fund's Payout Ratio is typically higher in the
first and fourth quarters compared to the second and third quarters
since Boston Pizza restaurants generally experience higher
Franchise Sales levels during the summer months when restaurants
open their patios and benefit from increased tourist traffic.
On a trailing 12-month basis, the Fund's Payout Ratio was 89.9% as
at March 31, 2024.
DISTRIBUTIONS
During the Period, the Fund declared distributions on the Units
in the aggregate amount of $4.8 million or $0.226 per Unit. During the first
quarter of 2023, the Fund declared distributions on the Units in
the aggregate amount of $4.4 million or $0.204 per Unit. During the Period,
the Fund paid distributions on the Units in the aggregate amount of
$7.1 million or $0.333 per Unit. During the first
quarter of 2023, the Fund paid distributions on the Units in the
aggregate amount of $6.6 million
or $0.306 per Unit. The
amount of distributions declared during the Period increased by
$0.4 million or $0.022 per Unit due to the monthly
distribution rate increasing from $0.102 per Unit to $0.107 per Unit commencing with the
March 2023 distribution and increasing again from $0.107 per Unit to $0.113 per Unit commencing with the
January 2024 distribution
(collectively, the "2023-2024 Distribution
Increases"). Distributions paid during the Period
increased by $0.5 million or
$0.027 per Unit due to the
2023-2024 Distribution Increases.
On February 13, 2024, the trustees of the Fund declared a
distribution for the period of January 1, 2024 to
January 31, 2024 of $0.113 per Unit, which was paid on
February 29, 2024 to Unitholders of record on
February 21, 2024. This was an increase of $0.006 per Unit, or 5.6%, from the previous
monthly distribution rate of $0.107 per Unit. On an annualized
basis, the new monthly distribution rate equates to $1.356 per Unit compared to $1.284 per Unit for the previously monthly
distribution rate.
On May 9, 2024, the trustees of
the Fund declared a distribution for the period of April 1, 2024 to April 30,
2024 of $0.113 per Unit,
which will be payable on May 31, 2024
to Unitholders of record on May 21,
2024. Including the April 2024
distribution, which will be paid on May 31,
2024, the Fund will have paid out total distributions of
$432.4 million or $26.47 per Unit, which includes 256 monthly
distributions and two special distributions.
FINANCIAL SUMMARY
The tables below set out selected information from the Fund's
unaudited condensed consolidated interim financial statements
together with other data and should be read in conjunction with the
unaudited condensed consolidated interim financial statements and
MD&A of the Fund for the three-month periods ended March 31, 2024 and March
31, 2023, and the Fund's audited annual consolidated
financial statements for the year-ended December 31, 2023.
For the
periods ended March 31
|
|
|
Q1 2024
|
Q1 2023
|
(in thousands of
dollars – except restaurants, SRS, Payout Ratio and per Unit
items)
|
|
|
|
Number of restaurants
in Royalty Pool
|
|
|
372
|
377
|
Franchise Sales
reported by restaurants in the Royalty Pool
|
|
|
222,032
|
224,201
|
|
|
|
|
|
Royalty
income
|
|
|
8,881
|
8,968
|
Distribution
Income
|
|
|
2,919
|
2,949
|
Total
revenue
|
|
|
11,800
|
11,917
|
Administrative
expenses
|
|
|
(436)
|
(391)
|
Interest expense on
debt and financing fees
|
|
|
(828)
|
(850)
|
Interest expense on
Class B Unit liability
|
|
|
(729)
|
(632)
|
Interest
income
|
|
|
66
|
68
|
Profit before fair
value gain (loss) and income taxes
|
|
|
9,873
|
10,112
|
Fair value gain (loss)
on investment in BP Canada LP
|
|
|
2,128
|
(218)
|
Fair value (loss) gain
on Class B Unit liability
|
|
|
(948)
|
97
|
Fair value gain (loss)
on Swaps
|
|
|
188
|
(892)
|
Current and deferred
income tax expense
|
|
|
(2,774)
|
(2,430)
|
Net and comprehensive
income
|
|
|
8,467
|
6,669
|
|
|
|
|
|
Basic earnings per
Unit
|
|
|
0.40
|
0.31
|
Diluted earnings per
Unit
|
|
|
0.37
|
0.24
|
|
|
|
|
|
Distributable Cash /
Distributions / Payout Ratio
|
|
|
|
|
Cash flows generated
from operating activities
|
|
|
9,100
|
9,220
|
BPI Class B Unit
entitlement8
|
|
|
(1,072)
|
(1,038)
|
Interest paid on
debt
|
|
|
(808)
|
(914)
|
Current income tax
expense
|
|
|
(2,365)
|
(2,390)
|
Current income tax
paid
|
|
|
2,462
|
2,311
|
Distributable
Cash
|
|
|
7,317
|
7,189
|
Distributions
paid
|
|
|
7,086
|
6,585
|
Payout Ratio
|
|
|
96.8 %
|
91.6 %
|
Distributable Cash per
Unit
|
|
|
0.344
|
0.334
|
Distributions paid per
Unit
|
|
|
0.333
|
0.306
|
|
|
|
|
|
Other
|
|
|
|
|
Same Restaurant
Sales
|
|
|
(1.0 %)
|
25.7 %
|
Number of restaurants
opened
|
|
|
1
|
0
|
Number of restaurants
closed
|
|
|
3
|
1
|
|
|
|
|
|
Mar 31, 2024
|
Dec 31, 2023
|
Total assets
|
|
|
415,517
|
413,055
|
Total
liabilities
|
|
|
132,973
|
134,169
|
|
|
|
|
|
|
SUMMARY OF QUARTERLY
RESULTS
|
Q1
2024
|
Q4
2023
|
Q3
2023
|
Q2 2023
|
(in thousands of
dollars – except restaurants, SRS, Payout Ratio and per Unit
items)
|
|
|
|
|
Number of restaurants
in Royalty Pool
|
372
|
377
|
377
|
377
|
Franchise Sales
reported by restaurants in the Royalty Pool
|
222,032
|
227,665
|
240,139
|
233,650
|
|
|
|
|
|
Royalty
income
|
8,881
|
9,106
|
9,606
|
9,346
|
Distribution
Income
|
2,919
|
2,992
|
3,155
|
3,071
|
Total
revenue
|
11,800
|
12,098
|
12,761
|
12,417
|
Administrative
expenses
|
(436)
|
(347)
|
(350)
|
(401)
|
Interest expense on
debt and financing fees
|
(828)
|
(839)
|
(838)
|
(843)
|
Interest expense on
Class B Unit liability
|
(729)
|
(1,321)
|
(1,055)
|
(982)
|
Interest
income
|
66
|
57
|
72
|
79
|
Profit before fair
value gain (loss) and income taxes
|
9,873
|
9,648
|
10,590
|
10,270
|
Fair
value gain (loss) on investment in BP
Canada LP
|
2,128
|
928
|
(7,857)
|
8,511
|
Fair value (loss) gain
on Class B Unit liability
|
(948)
|
(414)
|
3,501
|
(3,792)
|
Fair value gain (loss)
on Swaps
|
188
|
(2,250)
|
333
|
1,373
|
Current and deferred
income tax expense
|
(2,774)
|
(2,695)
|
(1,673)
|
(3,576)
|
Net and comprehensive
income
|
8,467
|
5,217
|
4,894
|
12,786
|
|
|
|
|
|
Basic earnings per
Unit
|
0.40
|
0.25
|
0.23
|
0.59
|
Diluted earnings per
Unit
|
0.37
|
0.24
|
0.06
|
0.59
|
|
|
|
|
|
Distributable
Cash / Distributions / Payout Ratio
|
|
|
|
|
Cash flows generated
from operating activities
|
9,100
|
9,288
|
9,659
|
9,759
|
BPI Class B Unit
entitlement
|
(1,072)
|
(1,081)
|
(740)
|
(1,006)
|
Interest paid on
debt
|
(808)
|
(817)
|
(825)
|
(848)
|
Current income tax
expense
|
(2,365)
|
(2,445)
|
(2,603)
|
(2,511)
|
Current income tax
paid
|
2,462
|
2,424
|
2,770
|
2,456
|
Distributable
Cash
|
7,317
|
7,369
|
8,261
|
7,850
|
Distributions
paid
|
7,086
|
6,830
|
6,848
|
6,909
|
Payout Ratio
|
96.8 %
|
92.7 %
|
82.9 %
|
88.0 %
|
Distributable Cash per
Unit
|
0.344
|
0.346
|
0.387
|
0.365
|
Distributions paid per
Unit
|
0.333
|
0.321
|
0.321
|
0.321
|
|
|
|
|
|
Other
|
|
|
|
|
Same Restaurant
Sales
|
(1.0 %)
|
0.6 %
|
5.3 %
|
6.6 %
|
Number of restaurants
opened
|
1
|
1
|
0
|
0
|
Number of restaurants
closed
|
3
|
4
|
0
|
1
|
SUMMARY OF QUARTERLY RESULTS
(continued)
|
Q1 2023
|
Q4 2022
|
Q3 2022
|
Q2 2022
|
(in thousands of
dollars – except restaurants, SRS, Payout Ratio and per Unit
items)
|
|
|
|
|
Number of restaurants
in Royalty Pool
|
377
|
383
|
383
|
383
|
Franchise Sales
reported by restaurants in the Royalty Pool
|
224,201
|
227,163
|
229,848
|
219,384
|
|
|
|
|
|
Royalty
income
|
8,968
|
9,087
|
9,194
|
8,775
|
Distribution
Income
|
2,949
|
2,988
|
3,027
|
2,895
|
Total
revenue
|
11,917
|
12,075
|
12,221
|
11,670
|
Administrative
expenses
|
(391)
|
(369)
|
(334)
|
(349)
|
Interest expense on
debt and financing fees
|
(850)
|
(812)
|
(886)
|
(977)
|
Interest expense on
Class B Unit liability
|
(632)
|
(1,557)
|
(835)
|
(733)
|
Interest
income
|
68
|
61
|
31
|
10
|
Profit before fair
value (loss) gain and income taxes
|
10,112
|
9,398
|
10,197
|
9,621
|
Fair value (loss) gain
on investment in BP Canada LP
|
(218)
|
(1,146)
|
2,183
|
(14,622)
|
Fair value gain (loss)
on Class B Unit liability
|
97
|
510
|
(972)
|
6,515
|
Fair value (loss) gain
on Swaps
|
(892)
|
106
|
572
|
1,337
|
Current and deferred
income tax expense
|
(2,430)
|
(2,462)
|
(2,478)
|
(1,075)
|
Net and comprehensive
income
|
6,669
|
6,406
|
9,502
|
1,776
|
|
|
|
|
|
Basic earnings per
Unit
|
0.31
|
0.30
|
0.44
|
0.08
|
Diluted earnings (loss)
per Unit
|
0.24
|
0.26
|
0.41
|
(0.20)
|
|
|
|
|
|
Distributable
Cash / Distributions / Payout Ratio
|
|
|
|
|
Cash flows generated
from operating activities
|
9,220
|
8,919
|
9,667
|
9,118
|
BPI Class B Unit
entitlement
|
(1,038)
|
(1,044)
|
(1,083)
|
(888)
|
Interest paid on
debt
|
(914)
|
(799)
|
(939)
|
(954)
|
Principal repayments
on debt
|
-
|
-
|
-
|
(1,000)
|
Current income tax
expense
|
(2,390)
|
(2,422)
|
(2,438)
|
(2,285)
|
Current income tax
paid
|
2,311
|
2,585
|
2,270
|
2,185
|
Distributable
Cash
|
7,189
|
7,239
|
7,477
|
6,176
|
Distributions
paid
|
6,585
|
8,329
|
6,133
|
5,488
|
Payout Ratio
|
91.6 %
|
115.1 %
|
82.0 %
|
88.9 %
|
Distributable Cash per
Unit
|
0.334
|
0.336
|
0.347
|
0.287
|
Distributions paid per
Unit
|
0.306
|
0.387
|
0.285
|
0.255
|
|
|
|
|
|
Other
|
|
|
|
|
Same Restaurant
Sales
|
25.7 %
|
24.5 %
|
8.4 %
|
64.9 %
|
Number of restaurants
opened
|
0
|
0
|
0
|
0
|
Number of restaurants
closed
|
1
|
3
|
1
|
0
|
SHORT-TERM OUTLOOK
The two principal factors that affect SRS are changes in guest
traffic and changes in average guest cheque. BPI's and BP
Canada LP's strategies to drive higher guest traffic include
attracting a wide variety of guests into the restaurant, sports bar
and take-out and delivery parts of each location, offering a
compelling value proposition to guests and leveraging a larger
marketing budget versus the previous year along with a revised
calendar of national and local store promotions. Increased
average cheque levels are expected to be achieved through a
combination of menu mix changes and increases to menu prices.
The success of BPI, BP Canada LP and Boston Pizza
Restaurants, and the amount of Franchise Sales, Royalty,
Distribution Income and Distributable Cash available for
distribution to Unitholders, are dependent upon many economic
factors, including impacts of inflation, increases in interest
rates, rising input costs, unemployment rates, consumer confidence,
recession, supply chain disruption, labour availability and other
globally disruptive events. Despite the current state of
economic uncertainty, Boston Pizza Restaurants have been able to
generate solid Franchise Sales and offer affordable dining options,
both on and off-premise, for guests in economically uncertain
times. As demonstrated during COVID-19, BPI, BP Canada LP and
Boston Pizza Restaurants have the ability to adapt to changes in
operating environments and economic conditions. However, with
supply chain challenges, rising interest rates, increasing input
costs and labour shortages impacting most of the restaurant
industry, together with widespread focus on sustainability and
climate-related issues, BPI's management remains cautious.
The focus of BPI's management is to adapt the business to
successfully mitigate these challenges and maintain positive sales
levels in 2024.
The trustees of the Fund will continue to closely monitor the
Fund's available cash balances given the uncertain economic outlook
and industry challenges.
Forward Looking
Information
Certain information in this press release constitutes
"forward-looking information" that involves known and unknown
risks, uncertainties, future expectations and other factors which
may cause the actual results, performance or achievements of the
Fund, Boston Pizza Holdings Trust, Boston Pizza Royalties Limited
Partnership, Boston Pizza Holdings Limited Partnership, Boston
Pizza Holdings GP Inc., Boston Pizza GP Inc., BPI, BP Canada LP,
Boston Pizza Canada Holdings Inc., Boston Pizza Canada Holdings
Partnership, Boston Pizza restaurants, or industry results, to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
information. All statements, other than statements of
historical facts, included in this press release that address
activities, events or developments that the Fund or its trustees
expect or anticipate will or may occur in the future, including
such things as, Boston Pizza restaurants generally experiencing
higher Franchise Sales levels during the summer months when
restaurants open their patios and benefit from increased tourist
traffic, BPI and BP Canada LP's ability to implement strategies
driving higher guest traffic and increased average cheque levels,
continued impact of supply chain challenges, high interest rates
and increasing input costs, the success of BPI, BP Canada LP
and Boston Pizza restaurants, and the amount of Franchise Sales,
Royalty, Distribution Income and Distributable Cash available for
distribution to Unitholders, being dependent upon many economic
factors, including impacts of inflation, increases in interest
rates, rising input costs, unemployment rates, consumer confidence,
recession, supply chain disruption, labour availability and other
globally disruptive events, continued ability to offer affordable
dining options, Boston Pizza restaurants having the ability to
adapt to changes in operating environments and economic conditions,
BPI's management remaining cautious, the focus of BPI's management
being to adapt the business to successfully mitigate challenges and
maintain positive sales levels in 2024, and the trustees of
the Fund continuing to closely monitor the Fund's available cash
balances given the uncertain economic outlook and industry
challenges, and other such matters are forward-looking
information. When used in this press release, forward-looking
information may include words such as "anticipate", "estimate",
"may", "will", "expect", "believe", "plan", "should", "continue"
and other similar terminology. The material factors and
assumptions used to develop the forward-looking information
contained in this press release include the following: the Fund
maintaining the same distribution policy, expectations related to
future general economic conditions, expectations related to guest
traffic and average guest cheques, and expectations that the Fund's
Payout Ratio is typically higher in the first and fourth quarter,
Boston Pizza restaurants maintaining operational excellence.
Risks, uncertainties and other factors that may cause actual
results, performance or achievements to be materially different
from any future results, performance or achievement expressed or
implied by the forward-looking information contained herein, relate
to (among others): competition, demographic trends, consumer
preferences and discretionary spending patterns, business and
economic conditions, interest rates and inflationary pressures,
legislation and regulation, reliance on operating revenues,
accounting policies and practices, the results of operations and
financial condition of BPI, BP Canada LP and the Fund, pandemics
and national health crises, in particular COVID-19, extreme weather
events, as well as those factors discussed under the heading "Risks
and Uncertainties" in the most recent Annual Information Form of
the Fund. This information reflects current expectations
regarding future events and operating performance and speaks only
as of the date of this press release. Except as required by
law, neither the Fund nor BPI assumes any obligation to update
previously disclosed forward-looking information. For a
complete list of the risks associated with forward-looking
information and the Fund's business, please refer to the "Risks and
Uncertainties" and "Note Regarding Forward-Looking Information"
sections included in the most recent Annual Information Form of the
Fund available at www.sedarplus.ca and www.bpincomefund.com.
The trustees of the Fund have approved the contents of this news
release.
® Boston Pizza
Royalties Limited Partnership. All Boston Pizza registered Canadian
trademarks and unregistered Canadian trademarks containing the
words "Boston", "BP", and/or "Pizza" are trademarks owned by the
Boston Pizza Royalties Limited Partnership and licensed by the
Boston Pizza Royalties Limited Partnership to Boston Pizza
International Inc. BP 60th Anniversary design is a
trademark of Boston Pizza Royalties Limited Partnership, used under
license.
|
© Boston Pizza
International Inc. 2024.
|
Notes – Non-GAAP, Specified Financial Measures and Other
Information
- "Franchise Sales" is the basis upon which Royalty and
Distribution Income are payable, and means the gross revenue: (i)
of the corporate Boston Pizza restaurants in Canada owned by BPI that are in the Royalty
Pool; and (ii) reported to BP Canada LP by franchised Boston Pizza
restaurants in Canada that are in
the Royalty Pool, without audit or other form of independent
assurance, and in the case of both (i) and (ii), after deducting
revenue from the sale of liquor, beer, wine and revenue from BP
Canada LP approved national promotions and discounts and excluding
applicable sales and similar taxes. Nevertheless, BP Canada LP
periodically conducts audits of the Franchise Sales reported to it
by its franchisees, and the Franchise Sales reported herein include
results from sales audits of earlier periods. Franchise Sales is
reported on a quarterly basis in the Fund's financial statements,
however, the financial statements do not report it on a monthly
basis. Therefore, when disclosed on a monthly basis herein, this is
a supplementary financial measure under National Instrument 52-112
Non-GAAP and Other Financial Measures Disclosure
("NI 52‑112"). The Fund believes that Franchise
Sales for this month provides useful information to investors
regarding recent performance of Boston Pizza.
- "Same Restaurant Sales" or "SRS" is a
supplementary financial measure under NI 52-112 and therefore may
not be comparable to similar measures presented by other
issuers. BPI defines SRS as the change in Franchise Sales of
Boston Pizza restaurants as compared to the Franchise Sales for the
same period in the previous year (where restaurants were open for a
minimum of 24 months). BPI believes that SRS provides
investors meaningful information regarding the performance of
Boston Pizza restaurants.
- "Distributable Cash" is a non-GAAP financial measure
under NI 52-112. Distributable Cash is not a standardized
financial measure under IFRS and may not be comparable to similar
financial measures disclosed by other issuers. The Fund
defines Distributable Cash to be, in respect of any particular
period, the Fund's cash flows generated from operating activities
for that period (being the most comparable financial measure in the
Fund's primary financial statements) minus (a) BPI's
entitlement in respect of its Class B Units in respect of the
period (see note 8 below), minus (b) interest paid on
debt during the period, minus (c) principal repayments on debt
that are contractually required to be made during the period, minus
(d) the current income tax expense in respect of the period,
plus (e) current income tax paid during the period (the sum of
(d) and (e) being "SIFT Tax on Units"). Management
believes that Distributable Cash provides investors with useful
information about the amount of cash the Fund has generated and has
available for distribution on the Units in respect of any
period. The tables in the "Financial Highlights" section of
this press release provide a reconciliation from this non-GAAP
financial measure to cash flows generated from operating
activities, which is the most directly comparable IFRS
measure. Current income tax expense in respect of any period
is prepared using reasonable and supportable assumptions (including
that the base rate of SIFT Tax will not increase throughout the
calendar year and that certain expenses of the Fund will continue
to be deductible for income tax purposes), all of which reflect the
Fund's planned courses of action given management's judgment about
the most probable set of economic conditions. There is a risk
that the federal government of Canada could increase the base rate
of SIFT Tax or that applicable taxation authorities could assess
the Fund on the basis that certain expenses of the Fund are not
deductible. Investors are cautioned that if either of these
possibilities occurs, then the actual results for this component of
Distributable Cash may vary, perhaps materially, from the amounts
used in the reconciliation.
- "Distributable Cash per Unit" is a non-GAAP ratio under
NI 52-112. Distributable Cash per Unit is not a standardized
financial measure under IFRS and may not be comparable to similar
financial measures disclosed by other issuers. The Fund
defines Distributable Cash per Unit for any period as the
Distributable Cash generated in that period divided by the weighted
average number of Units outstanding during that period.
Management believes that Distributable Cash per Unit provides
investors with useful information regarding the amount of cash per
Unit that the Fund has generated and has available for distribution
in respect of any period.
- "Payout Ratio" is a non-GAAP ratio under NI
52-112. Payout Ratio is not a standardized financial measure
under IFRS and may not be comparable to similar financial measures
disclosed by other issuers. The Fund defines Payout Ratio for
any period as the aggregate distributions paid by the Fund during
that period divided by the Distributable Cash generated in that
period. Management believes that Payout Ratio provides
investors with useful information regarding the extent to which the
Fund distributes cash generated on Units.
- Boston Pizza Royalties Limited Partnership ("Royalties
LP") licenses BPI the right to use various Boston Pizza
trademarks in return for BPI paying Boston Pizza Royalties Limited
Partnership a royalty equal to 4% of Franchise Sales of Boston
Pizza restaurants (the "Royalty") in the Fund's royalty pool
(the "Royalty Pool").
- "Distribution Income" is income received indirectly by
the Fund on Class 1 LP Units and Class 2 LP Units of BP Canada
LP. See the "Overview – Purpose of the Fund / Sources of
Revenue" section of the Fund's MD&A for the Period for more
details.
- "BPI Class B Unit entitlement" is a supplementary
financial measure under NI 52-112 and therefore may not be
comparable to similar measures presented by other issuers.
The BPI Class B Unit entitlement is the interest expense on
Class B Units in respect of a period plus management's
estimate of how much cash BPI would be entitled to receive pursuant
to the limited partnership agreement governing Royalties LP (a
copy of which is available on www.sedarplus.ca) on its Class B
Units if Royalties LP fully distributed any residual cash
generated in respect of that period after the Fund pays interest on
debt, principal repayments on debt and SIFT Tax on Units in respect
of that period. Management believes that the BPI Class B
Unit entitlement is an important component in calculating
Distributable Cash since it represents the amount of residual cash
generated that BPI would be entitled to receive and therefore would
not be available for distribution to Unitholders. Management
prepares such estimate using reasonable and supportable assumptions
that reflect the Fund's planned courses of action given
management's judgment about the most probable set of economic
conditions.
SOURCE Boston Pizza Royalties Income Fund